Labor Law of Kingdom of Saudi Arabia

Any employer who employs ten ormore workers shall submit to the Ministry, a work organization regulationincluding internal work provisions, within a year of the effective date of thisLaw

LABOR LAW

Royal Decree No M/51

23 Sha'ban 1426 / 27 September 2005

P.O Box: 21110 - Riyadh 11475 www.mol.gov.sa

First Edition 2006

In the name of God the Compassionate the Merciful

PART I

DEFINITIONS AND GENERAL PROVISIONS

Ministry: Ministry of Labor.

Minister: Minister of Labor

Labor Office: The administrative authority assuming jurisdiction over thelabor affairs within an area specified by a decision of the Minister

Employer: Any natural or corporate person employing one or moreworkers for a wage

Worker: Any natural person working for an employer and under his management

or supervision for a wage, even if he is not under his direct control

Minor: Any person of fifteen and below eighteen years of age

Work: The effort exerted in all human activities in execution of a (written orunwritten) work contract regardless of their nature or kind, be they industrial,trade, agricultural, technical or otherwise, whether physical or mental

PART I: DEFINITIONS AND GENERAL PROVISIONS

Incidental Work: Work that is not considered by its nature to be part of theusual activities of an employer, and its execution does not require morethan ninety days

Seasonal Work: Work that takes place in known periodical seasons

Part-time Work: Work performed by a part-time worker for an employerand for less than half the usual daily working hours at the firm, whethersuch a worker works on a daily basis or on certain days of the week

Continuous Service: Uninterrupted service of a worker for the sameemployer or his legal successor from the starting date of service Serviceshall be deemed continuous in the following cases:

(1) Official holidays and vacations

(2) Interruptions for sitting for examinations in accordance with the provisions

of this Law

Actual Wage: The basic wage plus all other due increments decided for theworker for the effort he exerts at work or for risks he encounters inperforming his work, or those decided for the worker for the work underthe work contract or work organization regulation This includes:

(1) The commission or percentage from sales or profits paid against whatthe worker markets, produces, collects or realizes from increased orenhanced production

(2) Allowances the worker is entitled to for exerted effort, or risks heencounters while performing his job

(3) Increments that may be granted in accordance with the standard ofliving or to meet family expenses

(4) Grant or reward: What the employer grants to the worker and what ispaid to him for honesty or efficiency and the like, if such grant or reward

is stipulated in the work contract or the work organization regulation ofthe firm or if customarily granted to the extent that the workers consider

it part of the wage rather than a donation

PART I: DEFINITIONS AND GENERAL PROVISIONS

in the work contract or the work organization regulation

Wage: actual wage

Firm: Any enterprise run by a natural or corporate person who employs one

or more workers for a wage of any kind

Month: Thirty days, unless it is otherwise specified in the work contract orthe work organization regulation

Regulations: The Implementing Regulations of this Law

Article (3):

Work is the right of every citizen No one else may exercise such rightunless the conditions provided for in this Law are fulfilled All citizens areequal in the right to work

Article (4):

When implementing the provisions of this Law, the employer and theworker shall adhere to the provisions of Shari'ah

Article (5):

The provisions of this Law shall apply to:

(1) Any contract whereby a person commits himself to work for anemployer and under his management or supervision for a wage

(2) Workers of the government and public organizations and institutionsincluding those who work in pastures or agriculture

(3) Workers of charitable institutions

(4) Workers of agricultural and pastoral firms that employ ten or more workers.(5) Workers of agricultural firms that process their own products

PART I: DEFINITIONS AND GENERAL PROVISIONS

(8) Part-time workers with respect to safety, occupational health and workinjuries, as well as what is decided by the Minister

Article (6):

Incidental, seasonal and temporary workers shall be subject to theprovisions on duties and disciplinary rules, the maximum working hours,daily and weekly rest intervals, overtime work, official holidays, safetyrules, occupational health, work injuries and compensation therefore as well

as whatever is decided by the Minister

(2) Domestic helpers and the like

(3) Sea workers working on board of vessels with a load of less than fivehundred tons

(4) Agricultural workers other than the categories stated in Article (5) of this Law

(5) Non-Saudi workers entering the Kingdom to perform a specific task for

a period not exceeding two months

(6) Players and coaches of sports clubs and federations

The Ministry shall, in coordination with the competent authorities, draftregulations for domestic helpers and the like to govern their relations withtheir employers and specify the rights and duties of each party and submitthe same to the Council of Ministers

Article (8):

Any condition that contradicts the provisions of this Law shall be deemednull and void The same applies to any release or settlement of the worker’srights arising from this Law during the validity of the work contract, unlessthe same is more beneficial to the worker

Article (9):

Arabic shall be the language used for data, records, files, work contracts andthe like as provided for in this Law or in any decision issued inimplementation of its provisions as well as the instructions issued by theemployer to his workers

If the employer uses a foreign language beside Arabic in any of thementioned cases, the Arabic text shall prevail

Article (10):

All periods and schedules provided for in this Law shall be according toHegira calendar, unless otherwise stated in the work contract or the workorganization regulation

PART I: DEFINITIONS AND GENERAL PROVISIONS

(2) In case of multiple employers, all of them shall be jointly and severallyresponsible for the fulfillment of the obligations arising from this Lawand the work contracts

Article (12):

Both the employer and the worker shall be familiar with the provisions ofthe Labor Law in all its contents so that each of them shall be aware of hisposition and of his rights and duties Any employer who employs ten ormore workers shall submit to the Ministry, a work organization regulationincluding internal work provisions, within a year of the effective date of thisLaw or from the date of reaching the quota Such regulations shall includethe work organization rules and all related provisions including theprovisions related to privileges, violations and disciplinary penalties, notcontradicting the provisions of this Law

Article (13):

The Ministry shall approve the work organization regulation and all amendments

to it within sixty days from the date of its submission to the Ministry

If such period elapses without approval or objection, the regulation shall beconsidered effective as of the end of such period

The employer shall announce the regulation by displaying it in a prominent

(3) Number of workers to be employed in the firm.

(4) Name of the firm’s manager in-charge

(5) Any other data required by the Ministry

PART I: DEFINITIONS AND GENERAL PROVISIONS

(3) In case no manager is appointed to be in charge of the firm, or if theappointed manager does not assume his duties, then the person whoactually runs the firm or the employer himself shall be considered themanager in charge of the firm

In all cases, the employer is ultimately liable

Article (17):

An employer shall maintain at the workplace records, statements and filesthe nature and contents of which shall be specified in the regulations Heshall display at a prominent location at the workplace a schedule ofworking hours, breaks, weekly rest days and time of start and end of eachshift, when operating in shifts

Article (18):

If the ownership of a firm is transferred to a new owner or a change takesplace in its legal form through merger, partition or otherwise, the workcontracts shall remain in force in both cases and service shall be deemedcontinuous As for workers’ rights accrued for the period prior to thechange such as wages or unrealized end- of- service award on the date oftransfer of ownership and other rights, the predecessor and the successorshall be jointly and severally liable However, in the case of transfer ofownership of individual firms, for any reason, the predecessor and the

Article (19):

Amounts due to the worker or his heirs under this Law shall be deemed first rateprivileged debts and the worker and his heirs shall, for the purpose of settling them,

be entitled to a privilege over all the employer’s properties In the case of bankruptcy

of the employer or liquidation of his firm, the aforementioned amounts shall beentered as privileged debts and the worker is paid an expedited amount equivalent toone month wage prior to payment of any other expenses including judicial,bankruptcy or liquidation expenses

Article (20):

An employer or a worker may not perform any act that may abuse theprovisions of this Law or the decisions or regulations issued for itsimplementation Neither of them may undertake any act that infringes uponthe freedom of the other or the freedom of other workers or employers torealize any interest or impose a point of view that conflicts with the freedom

of work or the jurisdiction of the competent authority in charge ofsettlement of disputes

Article (21):

The Minister, in implementing the provisions of this Law, shall coordinatewith relevant authorities whenever necessary

PART II

ORGANIZATION OF RECRUITMENT

PART II

ORGANIZATION

OF RECRUITMENT

Chapter One Employment Units

(3-1) Registration of job seekers

(3-2) Obtaining data on vacant jobs from employers

(3-3) Referring workers’ applications to suitable vacant jobs

(3-4) Providing advice and assistance to job seekers with respect to vocationalqualification and training or the required retraining to fill vacancies

(3-5) Other matters decided by the Ministry

Article (24):

The regulations shall specify the rules for work progress and procedures atthe employment units, forms of registers, notices and others used for itswork as well as the job classification tables, according to the official jobclassification, which shall be the basis for organization of recruitment

Article (25):

Every employer shall send the following to the competent labor office:

(1) A statement of vacant and new jobs, their types, locations, wages, andqualifications within a period not exceeding fifteen days from the date ofvacancy or creation

(2) A notice of measures taken to employ the citizens nominated by theemployment unit within seven days from receiving the nomination letter.(3) A list of names, jobs, professions, wages, ages, nationalities of hisworkers, numbers and dates of work permits for non- Saudis and otherdata specified in the Regulations

(4) A report on the status, conditions and nature of work and the anticipatedincrease or decrease in jobs during the year following the date of the report

Article (27):

The Minister may - when necessary in respect of certain activities and professionsand in some provinces and counties - require employers not employ workers untilthey have been registered at the employment units under the terms and conditionsspecified pursuant to his decision

PART II: ORGANIZATION OF RECRUITMENT

Article (28):

Each employer employing twenty- five workers or more where the nature

of his work allows recruitment of the professionally disabled shall employ anumber of disabled that represents at least 4% of the total number of hisworkers whether through nomination by the employment units orotherwise, and he shall send to the competent labor office a list of the jobsand posts occupied by the professionally rehabilitated disabled persons andtheir wages

Article (29):

If a worker sustains a work injury that results in a loss in his usualcapabilities that does not prevent him from performing another job, theemployer, in whose service the work injury was sustained, shall employsaid worker in a suitable job for the wage specified for such job This shallnot prejudice the worker's compensation for the injury

PART II

ORGANIZATION

OF RECRUITMENT

Chapter Three Private Offices for Recruitment of Citizens and Private Offices for Recruitment from Abroad

Article (30):

A natural or corporate person may not engage in the recruitment of Saudis

or in the recruitment of workers from abroad unless licensed for the same

by the Ministry The Regulations shall determine the functions of these twotypes of activities, the conditions for granting and renewing a license toeach of them, the duties and prohibitions as well as rules for non-renewal orrevocation of the license and the consequences thereof and other conditionsand controls necessary for ensuring the proper conduct of business

Article (31):

The Saudi workers to whose employment the recruitment offices contributedand the workers recruited from abroad on behalf of the employers shall bedeemed workers of the employer and bound to him by direct contractualrelation

PART III

EMPLOYMENT OF NON-SAUDIS

The conditions for granting the permit are as follows:

(1) The worker has lawfully entered the country and is authorized to work.(2) He possesses the professional and academic qualifications which thecountry needs and which are not possessed by citizens or the availablenumber of such citizens is insufficient to meet the needs, or that hebelongs to the class of ordinary workers that the country needs

(3) He has a contract with the employer and is under his responsibility The word "work" in this Article means any industrial, commercial, agricultural,financial or other work, and any service including domestic service

Article (34):

No permit or license required by any other agency for engaging in a work

or a profession may substitute for the said work permit

Article (36):

The Minister shall issue a decision specifying the professions and jobswhich are prohibited for non-Saudis

Article (37):

The work contract for non-Saudis shall be written and of a specified period

If the contract does not specify the duration, the duration of the workpermit shall be deemed as the duration of the contract

Article (38):

An employer may not employ the worker in a profession other than the onespecified in his work permit Before following the legal procedures for changingthe profession, a worker is prohibited to engage in a profession other than his

Article (39):

(1) Unless he has followed the stipulated legal rules and procedures, anemployer may not allow his worker to work for others, and a workermay not work for other employers Similarly, an employer may notemploy workers of other employers

(2) An employer may not allow a worker to work for his own account and aworker may not work for his own account

(2) A worker shall incur the costs of returning to his home country if he isunfit for work or if he wishes to return to his home country without alegitimate reason.

(3) An employer shall bear the fees of transferring the services of a workerwho wishes to transfer his service to him

(4) An employer shall be responsible for the cost of preparing the body of adeceased worker and transporting it to the location where the contractwas concluded, or where the worker was recruited unless the worker isinterred in the Kingdom with the approval of his family The employershall be relieved if the General Organization for Social Insurance (GOSI)undertakes the same

Article (41):

The Regulations shall specify the conditions for recruitment fromabroad, transfer of services and change of profession, and the controlsand procedures thereof

PART IV

TRAINING AND QUALIFICATION

PART IV

TRAINING AND

QUALIFICATION

Chapter One Training and Qualification of the Employer’s Workers

Article (42):

An employer shall be required to prepare his Saudi workers and enhancetheir technical, administrative, vocational and other skills for the purpose ofgradually replacing non-Saudis

The employer shall keep a record showing the names of the Saudi workerswho have replaced the non-Saudis in accordance with the conditions andrules set forth in the Regulations

Article (43):

Without prejudice to the conditions set forth in concession and otheragreements relative to training, qualification, education, and scholarships,every employer employing fifty or more workers shall annually train, in hisbusiness, a number of his Saudi workers not less than 6% of the totalnumber of his workers The Minister may raise this percentage in certainfirms pursuant to a decision by him

Article (44):

The training program shall provide for the rules and conditions to befollowed in training, its duration, number of hours, the theoretical andpractical training programs, method of testing and certificates to be granted

in this regard The Regulations shall set forth the general criteria and rules

to be followed in this regard to raise the worker’s level of performance interms of skills and productivity

Article (47):

The Minister may require the firms, to be identified pursuant to adecision by him, to accept a certain number or percentage of thestudents and graduates of colleges, institutes and centers to receivetraining and supplementary practical experience in accordance with theconditions, circumstances, durations and trainee allowances to bespecified in an agreement to be concluded between the Ministry and themanagement of the relevant firm

Article (49):

The training and qualification contract shall be subject to this Law’sprovisions on annual vacations, official holidays, maximum working hours,daily and weekly rest periods, occupational health and safety rules, workinjuries and their conditions as well as whatever is decided by the Minister

PART V

WORK RELATIONS

PART V

WORK

RELATIONS

Chapter One Work contract

Article (50):

A work contract is a contract concluded between an employer and a worker,whereby the latter undertakes to work under the management orsupervision of the former for a wage

Article (51):

The work contract shall be in duplicates, one copy to be retained by each ofthe two parties However, a contract shall be deemed to exist even if notwritten In this case the worker alone may establish the contract and hisentitlements arising therefrom by all methods of proof Either party may atany time demand that the contract be in writing

As for workers of the government and public corporations, the appointmentdecision or order issued by the competent authority shall serve as the contract

Article (52):

The work contract shall primarily include the name of the employer, venue,the name of the worker, nationality, identification, wage agreed upon, typeand location of work, date of employment, duration of the contract if fixed,subject to the provisions of Article 37 of this Law

Article (53):

If the worker is subject to a probation period, the same shall be expressly

PART V: WORK RELATIONS

Article (54):

A worker may not be placed on probation more than once by the sameemployer As an exception to this, the worker may, with the approval of thecontract parties, be subjected to another probation period of not more thanninety days on the condition that this period involves another profession orwork If the contract is terminated during the probation period, neitherparty shall be entitled to compensation nor shall the worker be entitled to

an end-of-service award

Article (55):

(1) The fixed-term contract shall terminate upon expiration of its term If thetwo parties continue to implement it, it shall be deemed renewed for anindefinite period of time, subject to the provisions of Article (37) of thisLaw for non-Saudi workers

(2) If the fixed-term contract incorporates a clause providing for its renewalfor a similar term or a specified term, the contract shall be renewed forthe period agreed upon If the contract is renewed for two consecutiveterms or if the original contract term and the renewal period amount tothree years, whichever is less, and the two parties continue to implement

it, the contract shall become an indefinite term contract

A monthly-paid worker may not be reclassified as a daily-paid, a weekly-paid

or an hourly-paid worker nor as a worker paid by piecework, unless the workeragrees thereto in writing and without prejudice to the rights he has acquiredduring the period he spent as a monthly-paid worker

Article (60):

Without prejudice to the provisions of Article (38) of this Law, a worker maynot be assigned duties which are essentially different from the work agreedupon without his written consent, except in cases of necessity dictated bytransient circumstances and for a period not exceeding thirty days a year

PART V: WORK RELATIONS

First: Employers’ Duties Article (61):

In addition to the duties provided for in this Law and the regulations anddecisions issued for its implementation, the employer shall be required to:(1) Refrain from using the worker without pay and shall not, without ajudicial instrument, withhold the worker’s wages or any part thereof.The employer shall treat his workers with due respect and refrain fromany action or utterances that may infringe upon their dignity andreligion

(2) Give the workers the time required to exercise their rights as providedfor in this Law without any deductions from their wages against suchtime He may regulate the exercise of this right in a manner notdetrimental to the work progress

(3) Facilitate for the employees of the competent authorities any task related

to the enforcement of the provisions of this Law

Article (62):

If the worker reports to work on the prescribed time or expresses hisreadiness to perform his work at such times but is prevented from doing soonly by a cause which is ascribed to the employer, the worker shall beentitled to the wage for the period during which no work is performed

to the punishments provided for in this Law on, without prejudice to theother punishments provided for in Shari’ah.

Article (64):

Upon expiration of the work contract, the employer shall be required to:(1) Give the worker, upon his request and free of charge, a certificate ofwork experience, indicating date of his employment, date of end ofwork, his profession, and the last wage received If the certificatecontains any remarks that are prejudicial to the worker’s reputation orlikely to limit his employment chances, the reasons shall be given

(2) Return to the worker all certificates and documents he had submitted

Second: Worker’s Duties Article (65):

In addition to the duties provided for in this Law and the regulations anddecisions in implementation thereof, the worker shall be required to:

(1) Perform the work in accordance with the trade practice and theemployer’s instructions provided that such instructions do not conflictwith the contract, the law or public morality and that they do not exposehim to any undue hazards

PART V: WORK RELATIONS

(3) Abide by proper conduct and ethical norms during work

(4) Extend all assistance and help without making it contingent onadditional pay in cases of disasters or hazards threatening the workplace

or the persons working therein

(5) Undergo, upon the employer’s request, the medical examinationsrequired prior to or during employment to ensure that he is free fromoccupational or communicable diseases

(6) Keep confidential the technical, trade and industrial secrets of theproducts or which he directly or indirectly contributed to theirproduction, as well as all trade secrets related to the work or the firm,the disclosure of which is likely to cause damage to the employer’sinterests

Third: Disciplinary Rules Article (66):

The disciplinary penalties that the employer may inflict on the worker:(1) Warning

(2) Fines

(3) Withholding allowance or postponing it for a period not exceeding oneyear if prescribed by the employer

(5) Suspension from work and withholding of wages.

(6) Dismissal from work in cases set forth by the law

Article (69):

A worker may not be accused of any offense discovered after the elapse of morethan thirty days, nor shall he be subjected to a disciplinary penalty after theelapse of more than thirty days from conclusion of the investigation andestablishment of the worker’s guilt

Article (70):

A worker may not be subjected to disciplinary penalty for an act committedoutside the workplace unless such act is related to the job, the employer orthe manager in-charge

Nor may a worker be fined for a single violation an amount in excess of a

PART V: WORK RELATIONS

Article (72):

The worker shall be notified in writing of the decision of imposing thepenalty on him If he refuses to receive the same or if he is absent, the noticeshall be sent to the address shown in his file by registered mail The workermay object to the decision of imposing the penalty upon him within fifteendays, excluding official holidays, from the date of notifying him of the finaldecision The objection shall be filed with the Commission for theSettlement of Labor Disputes which shall be required to issue its decisionwithin thirty days from the date of registering the objection

Article (73):

Fines imposed on the workers shall be entered in a special record, showingthe worker’s name, his wages, the amount of the fine, reasons and date ofthe fine Such fines may not be disposed of except for the benefit of thefirm’s workers, upon the Ministry’s approval